18
Feb
Wrap – Week Ended 2/17/12
1) Natural Gas Stocks Rebounding. From SWN to RRC, the gassier than not list is rebounding as current month futures make a bottom. While the talking heads have declared that gas has bottomed I think that's premature and am not upping natural gas exposure beyond current levels expect in special situations like SWN. Note the 12 month strip only got half the move of the near month's this past week as the strip knows we have the shoulder season looming in front of us and a most probable record early return to injections. Look for macro gas comments from a couple of big cap E&P players in Tuesday's post in the "The Week That Was Section".
Closed trades last week:
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More comments forthcoming ....
Z – some local utica color. Spent some time today talking to a gathering pipeline contractor who is looking to put in a 12 to 18 inch line through our property to move product from CHK Carrol County wells. The nearest pad to our property was just approved for its 5th well. Talking to a co rep, and reading between the lines, it seems like the plan is to initially drill six horizontals per pad into the Utica/Point Pleasant with 3 running parallel generally to the NE and 3 to the SE. Later they may reenter or drill new horizontals into the marcellus layer to produce gas. The pad near us drilled a marcellus horizontal which I think is a test that they reported IP at 696 MCF. Well footprint sections run from 128 Ac (limited by a lease dispute otherwise it would have run longer) to 166 Ac. These sections are consistent with GPOR's statement that they see one well per 160 Ac needed to drain the Utica.
February 18th, 2012 at 1:16 pmItaly – thanks for the color, much appreciated. One question, when you say permitted for the 5th well, are you saying they went ahead and have drilled the initial well and 3 more? Generally, at this stage of the game, they would just drill the one to hold the acreage and then move on, coming back in a year or two as they downspaced.
February 18th, 2012 at 1:21 pmhttp://www.marketwatch.com/story/iran-sends-warships-into-mediterranean-sea-2012-02-18?link=MW_home_latest_news
February 18th, 2012 at 2:47 pmZ – will work up a schematic and send it to you to show what they have permitted and what the pattern looks like. I'm sure that they are drilling the third well from the pad. they could be on the fourth though and they just dropped the permit request for the 5th. The rig was on site for a while, taken down last Nov, and came back early in Jan and has been working day and night since then.
February 18th, 2012 at 2:53 pmThanks Italy, I'm sure its just parallel sticks, I am somewhat surprised by the decision to start out with pad drilling, not that they won't go to it eventually but that they would be working on spacing from the get go. Generally people don't have that kind of time, especially guys like CHK who have a boat load of acreage. My thought would be that this is a pilot area for testing downspacing. Do you have any of the well names?
February 18th, 2012 at 2:56 pmYes parallel sticks. The most permitted well, and the one that's going under our land, is the Bucey 21-14-4. I count 11 different wells in Carrol county with multiple (three or more) permits from one pad. Not sure how many are drilled, drilling or just permitted though. I was thinking they were just trying to get some liquids increase quick in the core area, but that doesn't explain all the wells with multiple permits. Some others with three or more multiples: Mangun (Mang,8h,3h), Neider (3h,8h, 10h,6h), West (3, 3h, 8h, 10h), Bailey (6, 6h,1h,3h), White (8h,10h,3h), Snoddy (5h, 1h,6h), Houyouse (8h,1h,6h), Lozier (1h,3h,5h).
February 18th, 2012 at 3:42 pmOn Bucey: The permit sequence: 3H 3/9/11, 3h M (marcell) 7/6/11, 5h 12/6/11, 6h 12/6/11, 1h 1/20/12. I know they have drilled 3h, 3H M, and are either on 5H or 6H now.
Note: some of the multiples seem to be the initial verts that they then permit to go horiz. On Bucey they permitted the 3 well first then dropped a 3h later but I'm counting it as one well from the pad.
February 18th, 2012 at 3:44 pmThanks Italy, makes sense, thanks for the well name
February 18th, 2012 at 5:22 pmMake sure to follow us here as well:
http://seekingalpha.com/author/steve-zachritz/articles
These articles are generally late and not in bullet point format but sometimes more refined.
February 18th, 2012 at 5:23 pmBlackrock investing large into Brown Dense E&Ps. Think they know something? Thanks, Z, for the SWN pitch. I have a good position, but this makes me feel a little greedy for more:
February 18th, 2012 at 10:40 pmhttp://www.eldoradonews.com/news/WireHeadlines/2012/02/16/blackrock-increases-stake-in-brown-dense-20.php
Now if natgas weren't such a pain …
"The Brown Dense is part of the old Smackover formation, which in the 1920s produced one of the first U.S. oil booms. "
February 19th, 2012 at 10:10 amGotta love it. Revitalizing the roaring 20's is exactly what this country needs.
Reading the Wikipedia description of the time period, its amazing how similar some of the issues we have today are to those experienced during this time period. History always has a way to repeat itself.
If Congress could just open up their history books and stop bickering about who did what to whom the US may just return to economic prosperity once again.
The Roaring Twenties is a phrase used to describe the 1920s, principally in North America, but also in London, Berlin and Paris for a period of sustained economic prosperity. The phrase was meant to emphasize the period's social, artistic, and cultural dynamism. 'Normalcy' returned to politics in the wake of World War I, jazz music blossomed, the flapper redefined modern womanhood, Art Deco peaked, and finally the Wall Street Crash of 1929 served to punctuate the end of the era, as The Great Depression set in. The era was further distinguished by several long johns and realities of far-reaching importance, unprecedented industrial growth, accelerated consumer demand and aspirations, and significant changes in lifestyle and culture.
The social and cultural features known as the Roaring Twenties began in leading metropolitan centers, especially Chicago, New Orleans, New York, Philadelphia, Paris and London, then spread widely in the aftermath of World War I. The United States gained dominance in world finance. Thus when Germany could no longer afford war reparations to Britain, France and other Allies, the Americans came up with theDawes Plan and Wall Street invested heavily in Germany, which repaid its reparations to nations that in turn used the dollars to pay off their war debts to Washington. By the middle of the decade, prosperity was widespread. The second half of the decade becoming known as the "Golden Twenties". In France and francophone Canada, they were also called the "années folles" ("Crazy Years").[1]
The spirit of the Roaring Twenties was marked by a general feeling of discontinuity associated with modernity, a break with traditions. Everything seemed to be feasible through modern technology. New technologies, especially automobiles, moving pictures and radio proliferated 'modernity' to a large part of the population
ZMT, ZLT, ZLT C updated on the ZEB Positions tab
http://zmansenergybrain.com/subscriber-data/holdings-wiki/
February 19th, 2012 at 11:12 amZ, BOP, Zorg, et al:
February 19th, 2012 at 1:36 pmPattern Recognition:
Spend a lot of time digesting the daily Zman blog and observe that pattern recognition…………and in particular detecting rates of acceleration [good old 1st & 2nd Derivaties] in production, cashflow, land holdings in a new or developing play, etc.] seems to be a reliable predictor of future performance……….this is by no means a quantitative [Taguchi Style] effort……..often has a lot to do with 'feel' on new & developing plays like Brown Dense and/or Utica].
Just constantly reviewing the process on how to find the 'SWEET SPOT' in evaluating risk/reward.
My perfromance since finding Zman's website has consistently improved, and want to thank Z, his staff, and all those who contribute here daily.
Option Activity: NOG Tot Vol – 59219 – Calls 11,096 Puts 48,123. Average daily volume 7,404. HK also also big activity but of course has not been around very long.
February 19th, 2012 at 1:38 pmre 13 – you're welcome, have a great long weekend. ZLT at all time highs as of Friday and I continue to think that oil is ahead of itself and that we will see a significantly lull post 4Q earnings season (Ides of March mellowing?).
February 19th, 2012 at 1:55 pmRE 15: Do you anticipate you'll do some pruning or repositioning soon?
February 19th, 2012 at 2:04 pmYes, but not going to discuss names on the wrap which is open to the public. They will largely be some of the trading positions that were built up over summer/Fall/winter and then some of the names mentioned a week ago as cores that I think are redundant. Some that already done if you note one name in particular in the ZMT.
February 19th, 2012 at 2:08 pmStifel has a different view of CHK than some of the larger investment banking outfits that recently downgraded the company
Stifel Nicolaus raises its rating on Chesapeake Energy Corporation (NYSE: CHK [FREE Stock Trend Analysis]) to Buy from Hold as current price appears attractive as an entry point. Stifel Nicolaus establishes a $29 target price on shares.
Stifel Nicolaus says, "Current stock level provides an attractive entry point. Since the recent July 2011 high for the space, CHK is down 30% while the EPX is down 16% due to natural gas price weakness and the resulting impact of funding issues. Concern is for those with a 3-9 month view. The low gas price causes two issues, the cash flow drops meaningfully resulting in the company's 2012 EV/EIBTDA valuation not necessarily looking attractive. Secondly, the funding gap widens creating additional concerns at the same time the EBITDA valuation is no longer looking attractive for those with a 3-9 month outlook."
February 19th, 2012 at 3:43 pmUS closed tomorrow but crude trading tonight at $104.50
http://www.cx-portal.com/wti/oil_en.html
Iran playing their game pretty perfectly.
February 19th, 2012 at 6:03 pmCrude $105 … on Iran ships in the Med? Silly.
February 19th, 2012 at 6:15 pmIran stopped exporting oil to GB and France, IEA states that Saudis contracted supply and exports, tension in Mediteranean, China stimulus, Greeks approve austerity – perfect storm??
February 19th, 2012 at 9:23 pmSSN enercom presentation:
February 19th, 2012 at 11:01 pmhttp://www.samsonoilandgas.com.au/IRM/Company/ShowPage.aspx/PDFs/1457-74723255/EnercomPresentation
Significant S&P Futures Levels for next week 2/20-24.
After four attempts in Feb the 1352.50 level was broken to the upside and is now support.
1362.50 is the last congestion level with much definition to it. Demark weekly exhaustion "TD9" signal conirmed on Friday reflecting the now lenghty price extension. It's usually good for at least some sideways trading for several weeks. Short term studies suggesting a down bias for the next 5 days (OPEX Friday with S&P at high of 10 day range.Volume dropping two consecutive days
at 50 day S&P highs. Several VIX ratios.)However, Volume, breadth, volatility and POMO studies still support the current intermediate trend .
Bulls in control above 1345. Major support for trend at 1331.50. Expecting relative weakness this week with support levels to be tested and defended. Watch the reaction at the support levels.
Headline risk abounds. See #21 above
1362.50 Minor CHVN………………was my upside target for the move…little overhead with volume beyond here.
1352.50 Support/CLVN…………..expect bulls to defend on first test
1347.50 Minor Support/CLVN…minor support prior to volume pivot at 1345. Possible headfake support on a break of 1352.50
1345 Bullish pivot/MCHVN……pivot is rather broad..running from 1339-1345…expecting max chop in this area
1331.50 Major Support/CLVN….previous breakout level and intermediate trend support
1322.50 Acceptance/CHVN……..nearest major area of prior acceptance, possible downside target on correction of any size.
1317.50 support/CLVN……………Key support. Expect volatility to pickup here.
1310.50 Major Acceptance/CHVN
http://www.charthub.com/images/2012/02/19/ES_Composite.png
February 19th, 2012 at 11:10 pmXLE Levels
XLE made it to major acceptance at 75. Buying was shut off at that point. Resistance at 75.5 support at 74.
Expecting XLE to chop around in congestion above 74.
75.50 Minor Resistance/CLVN
75 Major Acceptance/CHVN
74 Minor Support/CLVN
73 Major CLVN
71 Major Acceptance
70 Support/CLVN
http://www.charthub.com/images/2012/02/19/Stock_Composite.png
February 19th, 2012 at 11:11 pmCrude
February 19th, 2012 at 11:12 pmBroke above resistance at 103.90, a three month trading range and 10 month high. Currently trading above 1 year and long term acceptance.
In rare air from 103.90 up…
1 year acceptance 98.56-101. Long term acceptance at 98.56
106.37 Resistance
103.90 Support
98-101 Major long and short term acceptance/Magnet
http://www.charthub.com/images/2012/02/19/CL_Weekly.png
Josh Brown gets a little worked up here..
February 19th, 2012 at 11:43 pmhttp://www.thereformedbroker.com/2012/02/19/how-ahmadinejad-can-save-the-us-economy/
Ram – nice summation
Ski – thanks, much more detailed section on the Montana Bakken, note they are going ahead and calling the area 35,000 net acres instead of the actual current holdings of 20,000
Australia II – still calling it currently fraccing, that should be done about now or tomorrow
The Montana Bakken pages have been updated, more color on the two wells, more color on the map on who is around them. All positive color in my book
Zorg – thanks for the levels
Market closed on Monday but I will be around.
February 19th, 2012 at 11:43 pm@22 Thanks skimo, didn't notice anything particularly notable/new
February 19th, 2012 at 11:43 pmSSN presentation differences I see tonight
February 19th, 2012 at 11:52 pmThey have 20,000 net acres, they have said mostly likely case is they get backed into and then add 20,000 more net acres and get backed into on that as well leaving them 31,000 net acres …. now they are calling that 35,000 net acres
The well detail is about the same as last presentation other than Australia II is now in progress on the frac
Then went on to say they will get a newbuild skiddable rig if they like Australia II and Gretel II and will drill 4 long lateral tests with it.
The added the 200 bopd note to the comments on Defender
RIG plans to skip dividend.
February 20th, 2012 at 9:05 amEOG Broke out of long term volume base in Feb.
February 20th, 2012 at 9:14 am119 Congestion
113.90 Minor Support
112.19 Support
108 Major Support
http://www.charthub.com/images/2012/02/20/Stock_Composite.png
SWN Broke resistance at 34. Congestion starts from 36 to 39. Resistance at 40
February 20th, 2012 at 9:24 am40 Resistance
38 Acceptance/Congestion
34 Support
31.50 Support
http://www.charthub.com/images/2012/02/20/Stock_Composite_3.png
RRC Interesting chart. Pushing through wide low volume rejection area between 64-67. Doesn't figure to stay there long.
February 20th, 2012 at 9:33 am66-67.50 Resistance
64 support
http://www.charthub.com/images/2012/02/20/Stock_Composite_4.png
REXX Support around 10 seems solid. Long term acceptance at 12
February 20th, 2012 at 9:40 amhttp://www.charthub.com/images/2012/02/20/Stock_Composite_5.png
Thanks Zorg – REXX increasingly interesting at these levels to me.
February 20th, 2012 at 9:47 amRIG will be announcing goodwill impairment charge. Earnings out after market 2/28. Stock cheap but they have been operationally challenged for some time. Be careful.
February 20th, 2012 at 9:49 amTom – thanks, you're out this week correct? Did you note RIG suspended the dividend as you long ago surmised they would? Nice job there.
February 20th, 2012 at 9:51 amOAS Breaking above volume base at 32.50. Area from 33-33.50 has been a low volume rejection level(up and down). Note the multiple gaps. Movement likely
February 20th, 2012 at 9:56 amto be fast in this area. Overhead volume declines quickly above 33.75. Long and short term volume demand positive.
32.50 support
http://www.charthub.com/images/2012/02/20/Stock_Composite_6
37: Yes I am heading to Charleston SC tomorrow. Will have my laptop for an occasional flyby. Always interested in what the gang here has to say.
February 20th, 2012 at 10:01 amRIG: The timing of their Aker merger was pretty weak. They had Macondo – downtime – newbuilds. Many issues that a multi $B merger made little sense at that time.
February 20th, 2012 at 10:05 amNOG Choppy battle ground stock. 24-26 congestion.
25.30 Major Acceptance
24.50 Near Resistance
24 Near support
23 Support
22.50 Major Support
http://www.charthub.com/images/2012/02/20/Stock_Composite_8.png
February 20th, 2012 at 10:27 amKOG Low volume breakout attempt at 10. Bulls in control above the 9.85 volume pivot.
February 20th, 2012 at 10:40 am10 Resistance
9.94 Minor Support
9.85 Acceptance/CHVN
9.50 Support
http://www.charthub.com/images/2012/02/20/Stock_Composite_9.png
TPLM At resistance and or breakout point. Bulls in control above 7.45.
February 20th, 2012 at 11:24 amhttp://www.charthub.com/images/2012/02/20/Stock_Composite_11.png
Zorg…
February 20th, 2012 at 11:29 amwhat is your take on FTK ? it broke through the 10.50 area last week down to 10.10 on Thursday and retested that same number on Friday before closing above the 10.50 mark. thanks.
Zorg, I'm relatively new to the site and enjoy looking at your charts and levels. I have a few questions – wonder if you have time today with the mkt closed – what does CLVN stand for? What are the blue/green/purple levels shown at the far right on the chart? Is that volume? Also what does the grey band running thru usually the middle of the chart horizontally represent?
February 20th, 2012 at 11:56 amthank you!
FTK Brod….I still see 10.55 area as significant. It was the high volume breakout point in January.
February 20th, 2012 at 12:23 pmThe breakout setup was right out of the momentum traders textbook and the stock likely showed up on every
breakout screen in the known universe. The stock made it to the Stock Twit's 50 attracting a lot of fast money.
Volume petered out and it came in and bounced at 11 three times and sagged back to the original break out point. The one day dip to the low volume node at 10.13 filled a gap from 12/31/11 and has now snapped back to the 10.55 area.
Long term volume demand is still positive so I'm viewing this swing pullback as complete. I'll be wrong if 10.13 is broken as short term volume demand fails to improve. In that case next support is at 9.50.
Lot's of late fast money breakout buyers are underwater from 11 up. I expect resistance at 11 and then again at 11.62.
I don't own it atm….
http://www.charthub.com/images/2012/02/20/Stock_Composite_15.png
z maybe today u could take a look at evolution petroleum (EPM) latest presentation. the main point he was stressing at ipaa was they are going to recieve a boatload of cash from Denbury over the next years, as is spelled out on slide 14,, and they are going to have to do something with it, and he is the largest shareholder. looks like a good prob to me. int in your opinion. thks
February 20th, 2012 at 1:32 pmAndy – will do.
February 20th, 2012 at 1:37 pm#45 JMlr
CLVN = composite low volume node. An area that has relatively little volume because for one reason or another the price has been rejected by either buyers or sellers as unfair. Most often when price approaching the CLVN area results in a reversal to some degree. Occasionally though the rejection can be a quick passage through the CLVN. It's the reaction to the level that is important and I offer them not as lines in the sand but areas of interest. CLVNs are areas with the biggest edge for detecting support or resistance as price moves to extremes from previous areas of acceptance. A CLVN suggests a support or resistance level but if it fails that function the information is useful in that it shows a shift in market perception of value is at work and a shift from range to trending is a hand as market seeks the next point of balance/acceptance.
CHVN = composite high volume node. An area that has been heavily auctioned and accepted by both buyers and sellers. Trade in this area is often choppy and edgeless as the volume is even balanced between buyers and sellers. Trading will often persist in these areas until new information comes into the market to upset the the balanced perception value. Momentum begins and ends in these areas as the bigger time frame money initiates buying or selling.
Take a look at the S&P futures chart at the bottom and break it down a bit.
The colored histogram on the right edge of the chart is the long term distribution of volume at price.
The colored histograms to the left are always the short term distribution of volume at price .
I use colors in the histograms to differentiate the intensity of volume at each price point. The bright orange
areas represent where there was heavy acceptance of price. I refer to these areas as CHVNs The darker colors represent areas that
have been lightly auctioned for various reasons. These are the CLVNs.
The grey lines mark the CLVNs. Notice that the CLVNs are positioned at relatively low volume points, indentations into the
long term volume histogram on the right.
I hope this helped some. I've just scratched the surface of this type of charting. The general principles apply to stocks as well, or buying and selling peanut butter for that matter.
If you want to learn more about the terms I sling around check out the glossary at the link below. If you want to move beyond that I can point you in a good direction to learn.
S&P Volume Profile Chart
http://www.charthub.com/images/2012/02/20/ES_Composite.png
Glossary
http://www.futurestrader71.com/?page_id=1280
February 20th, 2012 at 1:39 pmRe: 46
February 20th, 2012 at 3:47 pmThanks Zorg . Your thoughts in many ways mirror my own. I originally had 9.50 as support, i believe this represented a 50% retracement of the recent move up but reconsidered my decision based on your chartwork. Entered the position at 10.25 (25% of desired position) and will continue to monitor closely.
IBD is highlighting the energy sector and several of the room names.
February 20th, 2012 at 3:54 pmAPC KOG CJES ORIG BRY KEG GTLS
http://sector-trends.blogspot.com/2012/02/weekly-sectorgroup-analysis-21912.html
#50…brod..FWIW ….just noticed a DeMark TD9 exhaustion signal was completed on Friday on the daily..
February 20th, 2012 at 3:58 pmZorg, thank you for the explanations and examples. very helpful
February 20th, 2012 at 4:07 pmhttp://www.bloomberg.com/news/2012-02-20/clinton-signs-accord-in-mexico-for-oil-exploration-with-state-owned-pemex.html
February 20th, 2012 at 5:39 pmZ, I know it got real busy last week but will you be swinging back to take a closer look at the new TRGL/ZaZa as time allows? Thanks
February 20th, 2012 at 5:43 pmThanks Zorg
John – yeah, I've got it still about half done, will get to soon.
February 20th, 2012 at 6:45 pmBusy week ahead, ton of mid-cap E&P earnings plus Enercom.
February 20th, 2012 at 6:45 pmCOG on the tape, no mention of Brown Dense.
February 20th, 2012 at 7:28 pmJMlr #53
February 20th, 2012 at 7:54 pmYou are welcome. I find what I do works best with trying to identify extremes in price movement away from value where sellers or buyers are likely to become exhausted.
It can be particularly effective when that extreme is away from Z's perception of intrinsic value as well.
re 59 – me too.
February 20th, 2012 at 8:10 pmJoan now indicates that Chrevron is involved in Davy Jones and is excited. MAy not be news to all, but adds to the excitement as we wait and wait for DJ production news.
February 20th, 2012 at 8:29 pmhttp://www.forbes.com/sites/joanlappin/2012/02/20/a-little-bit-louder-now-chevron-starts-to-shout-about-davy-jones-and-the-ultra-deep/?partner=yahootix
re 61 – CVX is drilling the onshore well that ties into the ultra deep play, Lineham Creek (see Catalyst List). Excitement for CVX should be premature as that well is going to take a long time to drill, would not expect TD until 2H12.
February 20th, 2012 at 8:32 pmS&P Futures trading at the 1362.50 minor CHVN prior to the overnight Euro news.
February 20th, 2012 at 9:54 pmIn case of a news pop, looking for an upside target at 1375.25 with far resistance at 1381 Minor CLVN. News drop has support at 1352.50 CLVN
http://www.charthub.com/images/2012/02/20/ES_Composite_6.png
Greek deal reached
February 20th, 2012 at 10:03 pmWFT indicated to open sharply lower due to having to restate prior financial results
February 21st, 2012 at 7:22 amWPRT ,CMI – Wesport JV Deal with Cummins on New Engine
February 21st, 2012 at 8:16 amGreat information…
Great information mazon.com amzon.com amazn.com amazon.cm…
April 14th, 2012 at 9:49 am